Letourneau v. Hickey

Letourneau v. Hickey (2001-403); 174 Vt. 481; 807 A.2d 437

[Filed 16-Jul-2002]


                                 ENTRY ORDER


                      SUPREME COURT DOCKET NO. 2001-403

                               MAY TERM, 2002

  Laurent and Alicia Letourneau	       }	APPEALED FROM:
                                       }
                                       }
       v.	                       }	Orleans Superior Court
                                       }	
  Charles D. Hickey,	               }
  Michael and Susan Judd	       }	DOCKET NO.48-2-01 Oscv 

                                                Trial Judge: Howard E. Van 
                                                             Benthuysen 

             In the above-entitled cause, the Clerk will enter:


       Plaintiffs Laurent and Alicia Letourneau appeal the superior court's
  orders granting defendant Charles Hickey summary judgment on plaintiffs'
  legal malpractice claim, granting defendants Michael and Susan Judd summary
  judgment on plaintiffs' slander claim, and summarily denying plaintiffs'
  motion for relief from a judgment in a prior lawsuit involving the
  Letourneaus and the Judds.  We affirm.

       The present case arises out of an earlier lawsuit involving a boundary
  dispute.  The Letourneaus and Judds are neighbors who own adjacent
  agricultural property.  The Letourneaus tapped maple trees on land claimed
  by both parties.  The Judds sued the Letourneaus in 1998, seeking a
  declaration of the boundary line between the parties' properties.  Charles
  Hickey represented the Letourneaus in that case.  Following a two-day
  hearing, the trial court awarded the Judds title to the disputed property. 
  In its May 1999 decision, the court rejected the Letourneaus' adverse
  possession claim, but determined that the Letourneaus had acquired a
  prescriptive profit to harvest maple sap from trees in the disputed area. 
  No appeal was taken from that decision.  When the Letourneaus failed to pay
  Attorney Hickey for his legal services, he brought a collection action
  against them and obtained a default judgment in October 1999.
   
       In February 2001, the Letourneaus filed a complaint against Attorney
  Hickey and the Judds, alleging that Attorney Hickey had committed legal
  malpractice during his representation of them in the boundary dispute case,
  and that Michael Judd had slandered them during his testimony in that case. 
  Further, based on their malpractice claim, the Letourneaus sought relief
  from the judgment entered against them.  In two separate decisions, the
  superior court granted summary judgment to Attorney Hickey and the Judds. 
  The court ruled that the Letourneaus had waived their right to bring the
  malpractice claim by failing to raise it as a compulsory counterclaim in
  the collection action.  With respect to the slander claim, the court ruled
  that the allegedly slanderous testimony was privileged, and that, in any
  case, the Letourneaus had failed to provide evidence of any actual harm.

 

  The court also denied the Letourneaus' motion for relief from judgment
  without explanation in a motion reaction form.  On appeal, the Letourneaus
  argue that the superior court erred by granting summary judgment to
  Attorney Hickey and the Judds, and abused its discretion by dismissing
  their motion for relief from judgment without holding a hearing or making
  findings.

       In their first claim of error, the Letourneaus argue that the
  compulsory counterclaim rule of V.R.C.P. 13(a) does not apply to bar their
  malpractice claim because the judgment against them in the prior collection
  action was by default.  In relevant part, Rule 13(a) provides as follows:

    A pleading shall state as a counterclaim any claim which at the
    time of serving the pleading the pleader has against any opposing
    party, if it arises out of the transaction or occurrence that is
    the subject matter of the opposing party's claim and does not
    require for its adjudication the presence of third parties of whom
    the court cannot acquire jurisdiction.

  Generally, a counterclaim is compulsory if it bears a "logical
  relationship" to the opposing party's earlier claim.  Stratton v. Steele,
  144 Vt. 31, 35, 472 A.2d 1237, 1239 (1984).  Claims have a logical
  relationship with each other if the same aggregate set of facts serves as
  the basis for both claims, and the facts upon which the first claim arises
  triggers additional legal rights in the defendant that would otherwise
  remain dormant.  Id.  We have stated that issue and claim preclusion
  provide the doctrinal support for this rule.  Id. at 34-35, 472 A.2d  at
  1239; see In re Tariff Filing of Cent. Vt. Pub. Serv. Corp., 172 Vt.14, 20,
  769 A.2d 668, 673 (2001) (res judicata applies to compulsory
  counterclaims).  The reporter's notes indicate that Rule 13(a) merely
  identifies what types of claims are compulsory, and that a defendant who
  fails to assert such a claim is precluded from a later independent action
  "not by the rule itself, but by way of waiver or estoppel arising from the
  failure to plead."  Reporter's Notes, V.R.C.P. 13.

       The Letourneaus do not dispute that their malpractice claim is
  logically related to the collection action for purposes of Rule 13, but
  rather rely on another comment in the reporter's notes stating that "a
  defendant who defaults prior to answer or who submits to a consent judgment
  is not barred [from raising a compulsory counterclaim], because estoppel
  should not operate in such circumstances."  Id.  In the Letourneaus' view,
  their malpractice action is not barred because the judgment in the
  collection action was by default.  The Letourneaus point out that the
  comment in the reporter's notes, although merely advisory, is reinforced by
  the language of Rule 13 providing that a "pleading" must include compulsory
  counterclaims.  According to the Letourneaus, Rule 13 does not apply
  because they never filed a pleading in the collection action.
   
       As noted, this Court has indicated that res judicata is the
  theoretical basis for Rule 13(a), while the reporter's notes refer to
  waiver and estoppel.  The more flexible basis of waiver and estoppel gives
  courts the discretion to allow litigants in later independent actions,
  under certain circumstances, to raise what would otherwise be compulsory
  counterclaims from prior actions.  See 6 C. Wright, A. Miller & M. Kane,
  Federal Practice and Procedure § 1417, at 133-34 (2d ed. 1990).  For
  example, waiver and estoppel might not be applied to bar an otherwise
  compulsory counterclaim where the parties resolved their dispute by way of
  a consent judgment acknowledging the absence of the counterclaim, where the
  court granted the defendant's motion to dismiss before an answer was 

 

  due, or where the defendant did not knowingly refrain from asserting the
  counterclaim, such as when an insurance company controls the defense of the
  first action in the name of a defendant who wants to bring a later action. 
  See id. at 133-38.

       None of those circumstances exist here.  The Letourneaus attempted to
  evade service in the collection action, and were finally served only after
  the superior court granted Attorney Hickey's request to tack a copy of the
  summons and complaint to their residence.  Despite being served, they
  failed to file an answer to the complaint, but later filed several
  pleadings seeking to overturn the resulting default judgment. 
  Approximately twenty-one months later, the Letourneaus filed an independent
  malpractice action.  Rule 13 was not intended to protect defaulting
  litigants under such circumstances.  This is not a situation where the
  Letourneaus had no realistic opportunity to file their counterclaim in the
  prior action, or where the parties voluntarily agreed to a judgment without
  the counterclaim.

       Irrespective of whether the doctrinal underpinning of the compulsory
  counterclaim rule is res judicata or waiver and estoppel, "courts have
  given default judgments full effect and have held that a [compulsory]
  counterclaim omitted from an action that terminates in a default judgment
  will be barred from any subsequent suits."  Id. at 134; see Greyhound
  Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 160 (2d Cir.
  1992); In re Estate of Gaston v. Ford Motor Co., 898 S.W.2d 471, 474 (Ark.
  1995).  Indeed, in a case involving facts similar to the instant matter,
  the court stated that it would be "hard to imagine a clearer compulsory
  counterclaim to a complaint for failure to pay legal fees than a legal
  malpractice claim stemming from the handling of the litigation for which
  fees are sought."  Law Offices of Jerris Leonard, P.C. v. Mideast Sys.
  Ltd., 111 F.R.D. 359, 361 (D.D.C. 1986).  There, the court held that the
  defendant was barred from bringing the malpractice claim in a later action,
  even though the earlier action had resulted in a default judgment.  Id. at
  361-62 ("The fact that a party declines to appear does not prevent the
  default judgment from being set up as res judicata against it, barring
  subsequent counterclaims."); see Cianciolo v. Lauer, 819 S.W.2d 726, 727
  (Ky. Ct. App. 1991) ("when one is duly summoned and suffers a default, he
  not only loses his right to defend in that litigation, but also his right
  to assert in an independent action a claim deemed to have been a compulsory
  counterclaim" under Rule 13).

       The same resolution is appropriate here.  The Letourneaus' reliance
  upon Martino v. McDonald's Sys., Inc., 598 F.2d 1079, 1083 (7th Cir. 1979)
  is unavailing, insofar as it concerns a defendant who submitted to a
  consent judgment in the prior action.  To the extent that the reporter's
  note comment the Letourneaus rely on is inconsistent with the above
  analysis, we decline to follow it.  See State v. Machia, 155 Vt. 192, 196
  n.4, 583 A.2d 556, 558 n.4 (1990) (declining to follow comment in
  reporter's notes suggesting that Vermont Constitution required phrase to be
  read into V.R.Cr.P. 23).
        
       The Letourneaus also challenge the superior court's ruling on
  procedural grounds.  They argue that, by failing to notify the parties that
  it intended to treat their motions as ones requesting a summary judgment
  ruling on the malpractice claim, the court deprived them of an opportunity
  to present new materials and to amend their complaint if appropriate.  We
  find no merit to this argument.  The Letourneaus, who were represented by
  counsel, filed a motion to strike Attorney Hickey's affirmative defenses of
  estoppel and failure to file a compulsory counterclaim.  Attorney 

 

  Hickey filed a response labeled as a motion in opposition to the motion to
  strike or a cross-motion for summary judgment.  The Letourneaus did not
  file any further response, although they should have been on notice that
  the superior court would be treating the parties' motions as opposing
  summary judgment motions on the question of whether Rule 13 applied to bar
  the malpractice claim.  To the extent that such notice was not obvious, we
  perceive no prejudice.  The parties have had a full opportunity to present
  arguments on the legal question at issue.  The Letourneaus' vague
  suggestions as to what evidence or arguments they might have offered had
  they known the court was going to treat their motions as requests for
  summary judgment fail to satisfy their burden of demonstrating prejudice,
  assuming there was error at all.  See Nevitt v. Nevitt, 155 Vt. 391, 401,
  584 A.2d 1134, 1140 (1990) (party claiming error has burden of
  demonstrating prejudice by showing what evidence would have produced had
  court provided opportunity to do so).

       Next, the Letourneaus argue that the superior court erred by granting
  the Judds' motion to dismiss their slander claim.  That claim was based on
  the direct testimony of Michael Judd during the boundary dispute action. 
  In that case, the Judds claimed that the Letourneaus gave them free maple
  syrup in acknowledgment of the permissive use of their land.  The following
  exchange is the basis for the slander claim:

    Q: Do you have any recollection during the period of time Mr.
    Letourneau was sugaring whether or not your parents ever received
    syrup from him?

    A: I know they did, you know, on occasion, but they weren't real
    happy with his syrup.

    Q: Do you know the specifics of it?

    A: Well, he used to use rubber tires sometimes in the arch for,
    you know, a quick heat, you know, they were a good source of heat
    and a lot of times the syrup would taste, you know, like rubber
    tires.  It wasn't just Mr. Letourneau; anybody that used rubber
    tires, it was a chance of it tasting like burnt rubber.

       The superior court dismissed the Letourneaus' slander claim because
  the testimony was privileged and, in any case, the Letourneaus failed to
  plead any damages.  On appeal, the Letourneaus argue that the comments
  constituted per se slander because they were aimed at their livelihood, and
  thus they were not required to show actual harm.  Further, they argue that
  the comments were not pertinent to the litigation and thus not privileged.

       We conclude that the comments were privileged.  A person wishing to
  sustain an action for slander based on statements made in court

    "must show that the words spoken were not pertinent to the matter
    then in progress, and that they were spoken maliciously and with a
    view to defame.  So that if the words spoken were pertinent to the
    matter in hand, the party and counsel may claim full immunity from
    an action of slander,

 

    however malicious might have been his motive in speaking them. 
    So, too, if the words were not pertinent to the matter in issue,
    yet if the party spoke them bona fide, believing them to be
    pertinent, no action of slander lies."

  Clemmons v. Danforth, 67 Vt. 617, 623, 32 A. 626, 628 (1895) (quoting Mower
  v. Watson, 11 Vt. 536, 539-40 (1839)).

       The Letourneaus argue, however, that because the quality of the syrup
  was irrelevant to whether they had provided the Judds with consideration
  for use of the disputed land, the comments were not pertinent to the
  lawsuit.  Again, we disagree.  On the meaning of the term "pertinent" in
  this context, a leading commentator has noted:

         It is the rule in England that the immunity exists as to any
    utterance arising out of the judicial proceeding. . . .  Nearly
    all of the American courts, alarmed at the idea that a court of
    justice might become a place where extraneous defamation may be
    published with complete freedom, have said that there is no
    immunity unless the particular statement is in some way "relevant"
    or "pertinent" to some issue in the case.  On this basis
    defendants have been held liable, for example, for entirely
    foreign and irrelevant defamation of a person in no way involved
    in the suit.  But it is generally agreed that "relevancy" does not
    mean that the statement must come within the technical rules of
    evidence, since a witness should not be required to determine at
    his peril whether his testimony may safely be given, or deterred
    by fear of suit from what he believes to be proper, and if he is
    asked a question, he may reasonably be expected to reply with
    anything reasonably responsive to it.  Most of our courts have
    adopted what appears to be a standard of good faith, requiring
    only that the statement have some reasonable relation or reference
    to the subject of inquiry, or be one that may possibly be
    pertinent, with doubts resolved in favor of the defendant - a
    conclusion which seems in effect to adopt the English rule.

  W. Keeton, Prosser and Keeton on the Law of Torts § 114, at 817 (5th ed.
  1984) (internal quotations omitted).

       The allegedly slanderous comments in this case fell within this
  liberal standard and thus were privileged.  The comments may not have been
  necessary to determine whether the Letourneaus gave the Judds some sort of
  consideration to repay them for the use of their trees, but they were
  reasonably responsive to questions referenced to that inquiry.
   
       Finally, the Letourneaus argue that the superior court abused its
  discretion by granting the Judds' motion to dismiss their motion for relief
  from judgment without holding a hearing or making findings.  The
  Letourneaus contend that the failure of the court to hold a hearing
  deprived them of an opportunity to develop evidence such as whether
  Attorney Hickey's malpractice was attributable to his having represented
  Michael Judd's brother in a previous divorce action.  Further, the

 

  Letourneaus assert that the failure of the court to make findings makes it
  impossible for this Court to know the basis of the superior court's
  decision and thus assess whether the court acted within its discretion in
  denying their motion. We agree that the court should have stated the basis
  for its decision, but we conclude that no remand is necessary because the
  Letourneaus' request under V.R.C.P. 60(b)(6) to reopen the boundary dispute
  is totally lacking in merit, see A.M. Varityper v. Rabbo, 146 Vt. 471,
  474-75, 505 A.2d 671, 673 (1986) (trial court may summarily deny Rule 60(b)
  motion without hearing if it is frivolous or totally lacking in merit), and
  the reason the trial court denied the motion is manifest.  Nothing in the
  Letourneaus' motion suggests the type of extraordinary circumstances that
  would allow the court to reopen a twenty-one-month-old civil judgment based
  on vague and speculative allegations of attorney malpractice.  See Carroll
  v. Abbott Labs., 654 P.2d 775, 778 (Cal. 1982) (except for extreme cases,
  client's redress for attorney's inexcusable neglect is limited to action
  for malpractice and may not be basis for obtaining relief from judgment);
  Annotation, Incompetence of Counsel as Ground for Relief from State Court
  Civil Judgment, 64 A.L.R.4th 323, 335-40 (1988) (general rule is that
  attorney incompetence is not ground for disturbing civil judgment, except
  in extraordinary circumstances).

       Affirmed.

                                       BY THE COURT:


                                       _______________________________________
                                       Jeffrey L. Amestoy, Chief Justice

                                       _______________________________________
                                       John A. Dooley, Associate Justice

                                       _______________________________________
                                       James L. Morse, Associate Justice

                                       _______________________________________
                                       Denise R. Johnson, Associate Justice

                                       _______________________________________
                                       Marilyn S. Skoglund, Associate Justice